We have previously discussed the myth that 80% of all options expire worthless, which causes many options traders to forgo one whole side of the trading equation. Namely, buying options. This week I want to pull back a bit and discuss some of the broader and more general myths that persist and…

Unlimited risk option strategies get a bad rap in the investing community among newbie traders. And while our backtesting research has shown that unlimited risk positions like short straddles and short strangles generate the best overall returns, you might be restricted in trading them because of your account type or…

Facts are facts right? They can’t be argued. The truth is that most people who trade options fail miserably and lose money each year. But if you’re reading this blog, I think it’s safe to assume that you could be one of the people who prosper from options trading. Let’s be…

Using option activity as an indicator for impending price moves is difficult, subjective, and unreliable. That being said, it can help confirm other indicators and increase the probability of a profitable trade.

The reason options were invented was to reduce risk. Options transfer risk from the risk averse to the risk taker. When you accept that specified risk, the risk taker (seller) is paid a cash premium by the risk avoider. If you have been reading my daily newsletter, by now you…

Are you are ready to start making money trading but you don’t know where to start? You want your investment returns to beat the market, but you don’t want to blow all your hard-earned money trying to learn how. I completely understand. When I started, I had the same exact…

OK, so the headline is a little strong. I can’t know the future, of course. However… 100% of the time – over the past 90 years – stocks have been higher after going through what they just went through. Can you name another indicator that has called the market correctly…

Most traders have a bullish mindset, and usually for good reason. Over the last 50 or so years, the market has moved higher. There will always be declines, but the market has always recovered losses and moved to all-time highs. That’s just a fact anyone can see if you look…

The objective of every trader is to make money, but with an acceptable amount of risk. We find that one of the major issues for new options traders is because they have no idea how to use options to achieve their financial goals. Buy low and sell high is certainly…

Go look at the options chain… Does that make sense to you? If it doesn’t, today is your luck day. This video done by our friends at TraderFly.com illustrates exactly how to view an options pricing table, or chain, for even the greenest traders. Enjoy! — The Option Specialist

The last few market sessions have been scary, but they are very normal. Most experts predict we could see a correction every 8-12 months, and last on average about 54 days. What’s most strange is that corrections are a sign of a healthy stock market… in most cases. A correction…

So much for profiting off of a calm but booming stock market. The dramatic sell-off in stocks Friday and Monday forced a flood of buying in derivatives to close out one of Wall Street’s biggest trades: while buying stocks, traders were betting against volatility, which has been near historic lows….

We are following a very similar script from January 2016. So what exactly did we learn was the best strategy for profiting in a crashing market… Well, for most investors to make money, they tend to follow the market and go long when the market is rising. Alternatively, they go…

Let’s say for instance you have targeted a stock or ETF setup you like and want to make a directional trade. Maybe some technical indicator alerted you to a possible turn in the underlying or you just needed to hedge your portfolio with a new trade. Whatever the case, you…

One promoter who likes the idea of writing covered calls states that: “Over 75% of all options held until expiration expire worthless… That’s why you should do what the pros do and sell options to other people. After all, if most of them will expire worthless, why not collect some money for…

What if there was a simple trick to juicing profits during earnings season, regardless of the direction of the stock. For trades, the number single biggest problem during earnings season is not knowing where a stock will move after its earnings come out. And that not know can make it…